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March 21, 2015 – Weekend Market Comment

March 21, 2015 – U.S. stocks jumped about 1 percent to close near highs on Friday, continuing several days of alternating gains and losses as investors weighed a weaker dollar amid options expirations. The Dow Jones industrial average and S&P 500 broke three weeks of consecutive losses to post gains of more than 2 percent for the week. The Dow Jones Industrial Average briefly rose more than 225 points before paring gains to close up 168.62 points, or 0.94 percent, at 18,127.65, with Nike leading gains and Apple and UnitedHealth the greatest laggards. The blue chip index posted gains of 2.13 percent for the week.

The Nasdaq closed up 34.04 points, at 0.68 percent, at 5,026.42, above the psychologically key level of 5,000 for the second time since the tech bubble in March 2009. The index had its best weekly gain since the week ending October 31 as the index approached its 15-year record closing high of 5,048.62. Biotech stocks and Facebook led gains. The S&P 500 closed up 18.79 points, or 0.90 percent, at 2,108.06, just shy of its record close of 2,117.39. Energy led gains across all 10 sectors as the index posted an increase of 2.66 percent for the week. Four shares advanced for every decliner on the New York Stock Exchange, with an exchange volume of 2.1 billion and a composite volume of 5.1 billion.

What I Think
Well I said enough, this is a short pull back while people fear the fed will raise rates, followed by a relief rally that is not in the cards for at least 6 months.  The S&P 500 and Dow Jones industrial average have not had two days of consecutive gains or losses since the middle of February. Friday marks the eighth consecutive trading session in which the two indices have alternated between daily gains and losses, with the Dow moving triple-digits each day. If you follow the Bull Bear Lines you can see, we are still in a Bull Market. This is why I recently cautioned against counter trend moves in a bull market.

It All Shows Up In The Charts . . . 

Bull Bear Lines
Well the bounce back up is clear. As you can see this was a very rapid pull back. Volatility is making market timing difficult. 

Primary Sell 
Looks like we have an all clear sign from the pros who are taking off insurance. 

Aggressive Defensive Graph
Notice the topping and lagging defensive stocks are getting a run now. 

Bond vs Equities
Well Bonds held up well last week but the clear winner this week is equities. 

S&P500 Over 50 Day
Also the bounce is clear here as investors scoop up laggards and bargains..

Green Arrow Graph
Our Green arrow graph is turned up in fact almost at a green arrow. The climate for putting new money to work looks good.

Nasdaq Summation
Also very interesting, looks like tech is getting a bounce. A huge part of this is the strong performance of biotech and health care stocks.

NYSE New High Low
Strength returns to the big board as the upward march continues. 

This chart mirrors what the Aggressive Defensive Chart says. The new trend is safer stocks like the defensive ETF. 
XLF - Financial Stocks - Dark Blue dots
QQQ - Nasdaq - Purple
XLY - Consumer discretionary - Green
XLU - Utilities - Red
DEF - Defensive stocks - Brown

On Balance Volume is keeping pace with the current market. A great relief as smart money returns to the market.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.

VIX Evaluator
Don't forget this is an experimental VIX indicator... recently I said it looks like it is saying... my look how close I am to the edge of my rangecool I am dropping a good sign for the market......Well THIS week it continued down... 

We are in a bull market and completed a pull back. Two weeks ago I was "gently pulling my horns in" this week, I put some cash to work in this buying opportunity.

If you read last weeks blog it was 360 degrees form this week. Volatility is making the market gyrations quicker and it is harder to time trends. But one trend is for sure the overall market is bullish. 

You can learn more about my indicators by visiting the CME4PIF school by clicking here.